Planning a Student Budget
The good news about your college finances is that you won’t have a heck of a lot of cash coming in, so, there’s not a lot to budget going out. If you use a little common sense and educate yourself even moderately, you will be able to manage your college money without a hitch.
Quick College Budget Tips
When planning your college budget, write down some basics on a sheet of notebook paper or an excel spreadsheet. Your initial thoughts might go something like this:
Financial aid money + Money from Mom and Dad + Summer job + Part-time job = $
If you don’t know the exact numbers, estimate on the conservative side. Add these numbers, and come up with the answer. Then, divide by 12. This will give you a monthly budget. (This is the amount of money you can spend without digging yourself an enormous hole).
Now, you will need to come up with a list of your annual and monthly itemized expenses. This will be a little more complicated. When it comes to your expenses, best err on the liberal side (meaning if you don’t know the exact number, provide an estimate that is higher than your initial guess). Some of the key items you will want to include on your expense list are:
- Tuition & books
- Wireless phone bill
- Housing
- Transportation & gas (if you have a car)
- Utilities
- Groceries
- Clothing
- Entertainment
- Personal supplies
- Etc…
After you make this list, write down the estimated expenses. Add them, and divide by 12. This number is your monthly total.
If you are lucky, the sum of your income will exceed your expenses, leaving you with extra each month … if you are lucky. This is a budget at the most basic level. Plan one of these and stick to it, if it’s one of the few things you do right in college. It could make all the difference to your financial future.
Budget Basics
As you develop a student budget that works for you, also consider these basic budgeting points:
- It’s important to remember that a monthly budget is the most useful since seasonal and monthly expenses often fluctuate. When figuring your annual amounts always divide that number by 12 to see where you are on a monthly basis for the year.
- Take your time and be thorough when listing your expenses. If you forget to add even one item to your expense tally, it could throw your entire budget out of whack. It is always better to err on the generous side than to underestimate your bills.
- As one of your regular expense items, try to reserve a minimum of 10% of your income as reserve money to put into savings. In college, it might be hard to save; however, if you can put away even $25 a month, that is better than nothing. It will gradually add-up and at the end of the year you will have $300 in the bank, which will help pave the way to financial independence.
- Keep in mind that some monthly expense items, such as food and entertainment, are not easy to account for. Instead of delaying your initial budget, estimate the numbers you anticipate. As time goes by, you can make adjustments, accordingly.
- When you have all of your expenses accounted for, and subtract that number from your income, you should have a positive number remaining. This number is your cushion money to put into savings or to use for emergencies and unexpected expenses. In the event you come up with a negative bottom line, you will need to find creative ways to cut back on your expenses.
Pesky Debit Cards
Debit cards are a convenience; however, if you use your debit card like a credit card - whipping it out at the gas station, movie theater, dining hall, and grocery store - be certain to keep a spending record. For that matter, debit cards shouldn’t even be used on a tight budget.
Case in point: two checks go through your account on Saturday, unbeknownst to you. On top of that, you make eight debit transactions (even tiny ones) the same weekend. When an overdraft situation of this magnitude hits your account, it can spiral into a horrific situation instantaneously (consider $30 overdraft fees for each of those 8 transactions) … negative $240, on a student budget, will definitely put a crimp in your spending money.